Proposed EU SEP Regulation gets pushback from influential European People's Party MEP: draft opinion of Committee on International Trade (INTA)

Finally, the proposed EU regulation on standard-essential patents (SEPs) has been formally criticized--in the form of a draft committee report--within the European Parliament (EP). Not just from within the EP, but also from within the EPP: that's one more P and stands for European People's Party. The EPP is the largest group in the EP, though with 25% of the votes it's not as powerful anymore as it used to be at its peak where it needed only one other (and reasonably large) political group to form a majority (reasonably consistent voting along party lines provided).

There are many rapporteurs on a dossier (legislative or other matter) in the EP, which made it hard to get anything done against the EPP.

So I have to start with the proceudral context. The EP determines a lead committee on a given dossier. In this case, that's the Committee on Legal Affairs (JURI). One member of the lead committee becomes the entire EP's rapporteur. Every other political groups selects a shadow rapporteur, who is also a member of the lead committee. Sometimes shadow rapporteurs disagree fundamentally with the Parliament's rapporteur, whose positions may even be controversial within the same political group.

Here, the EP's rapporteur on the EU SEP Reg is Marion Walsmann, a (German) member of the EPP who started her political career as a parliamentary supporter of the East German communist dictatorship, which is my way to state a simple fact that is mentioned on the German but not the English Wikipedia page. The Christian Democratic Party of the German "Democratic" Republic was not an opposition party: it was part of an effort to pretend pluralism, and its politicians such as Mrs. Walsmann at the time enjoyed privileges for applauding the ruling communist party as it oppressed the true democrats in the country. There were opportunistic reasons for which all major West German parties except the Greens (there simply was no faux Green party in the GDR as the Green movement started toward the end of the GDR's infamous history) merged with their nominal East German counterparts right after reunification: it was mostly about money, and to some extent also about inheriting some existing structures. I'll leave that story for another day.

Mrs. Walsmann is deemed to be in favor of the proposal, or even of amendments that would cause further harm to SEP holders, but that is clearly not a consensus position, not even within her own political group. If one or more other committees are designated to provide an opinion, every such committee also has a rapporteur (and then there are shadow rapporteurs at the committee level). For the Committee on International Trade (INTA), the rapporteur is also a member of the EPP: Polish MEP (and former EU commissioner for regional policy) Danuta Hübner.

On Monday, Professor Hübner submitted her draft opinion: an 82-page document that contains a long list of amendments, the bottom line of all of whic his that SEP enforcement should not be restricted, complicated, obstructed, or delayed in any way, and particularly not the enforcement of non-EU SEPs.

Professor Hübner proposes

• to drop the part about aggregate royalty determinations (for all SEPs related to a given standard) entirely, which is consistent with a proposal by one of the researchers who were commissioned by the EC's Directorate-General for the Internal Market in this context;

• to limit bilateral everything else (which is not the case for bilateral FRAND determinations under the Commission proposal) to patents valid in the EU, which makes particular sense for a trade committee to propose but is equally common sense;

• to define reasonably clearly the scope of the regulation and not to delegate excessive powers to the Commission, an aspect on which she is particularly qualified to opine as a former chair of the EP's Constitutional Affairs Committee;

• to steer clear of disproportionate restrictions of patent holders' rights to enforce their IP, which actually raises international trade (as many patents valid in the EU are held by non-EU companies) and constitutional (fundamental rights) issues at the time; and

• to put more specific and elaborate measures in place to assist SMEs with a view to their participation in standardization as well as with a view to assisting them in their inbound licensing efforts.

The draft committee report coherently and consistently seeks to codify those objectives and to straighten out some other flaws, such as a weak definition of the term "patent family." Professor Hübner's proposal is certainly of a far higher quality than the Commission proposal, which in this case is, however, not a significant threshold.

There are some details I disagree with. In particular, the rationale provided for some proposed amendments is that removal of a patent from the envisioned EU SEP Register would render it unenforceable, but one could even argue that such a patent becomes even more enforceable: national courts or the Unified Patent Court (UPC) could still deem it essential, but it would not fall under the rules of the proposed regulation, and even if courts did not deem it enforceable, it might be a formidable non-SEP. The only respect in which the removal of a declared SEP from the register is certain to adversely affect its owner is that the company's essentiality ratio for the purposes of EU FRAND determinations will go down. Whether national courts will be swayed at all by those EUIPO-led determinations by anonymous "evaluators" is impossible to tell right now. As a litigation watcher, I could easily see lots of situations in which an infringement court would deem a patent essential notwithstanding an EUIPO-led negative determination. If some national courts--as I've just seen in the dispute between Nokia and OPPO--arrive at different conclusions on comparable questions than courts in another EU Member State, why wouldn't they also just use their own judgment instead of adopting the outcome of an opaque and generally low-credibility process?

But let's not get lost in details. A month ago I already said that the EC proposal "is a hot mess that lawmakers can dilute but not fix due to structural issues, fudnamental rights, and international obligations." Looking at it from that angle, I think the most straightforward proposal for Professor Hübner to make would actually have been to propose only one deleting amendment. Strike the whole thing because it's crap. It's easy to see, though, why she didn't do that: while perfectly warranted, it would be viewed by many as not being constructive.

What would the net effect of those amendments be? Dilution and delay (the latter because she'd extend the initial implementation period from 24 to 36 months).

Would the proposal--regardless of the proposed INTA position being consistent and coherent--serve any purpose? No, with just one exception: the part about helping SMEs might make sense, though that one is so small that it wouldn't warrant an entire legislative measure in its own right. There wouldn't be much else left. The aggregate royalty determinations would be thrown out; the bilateral process would be voluntary, and while there are strong reasons for limiting the scope of the regulation to SEPs valid in the EU, global licensing disputes result in global license agreements, so it is doubtful that the FRAND determination process would play much of a practical role.

I hope that some political group(s) will ultimately propose an amendment that enables MEPs to vote down the proposal as a whole. But at this stage, all that people can do is propose countless amendments. This is still an early stage of the process.

The EP votes on each amendment separately, though the non-binding voting lists provided to MEPs seek to ensure consistency. If just some of Professor Hübner's amendments got support in the further process (be it a parliamentary vote or a so-called trilogue where representatives of the EP, the EU Council, and the EC try to broker a deal that an EP majority typically rubberstamps), the regulation could become toothless. It can't be reduced to absurdity because it already is absurd, but something absurd that may not even benefit implementers as much as some of them hope might be defanged.

The intellectually most honest and generally most rational outcome would be for the EU not to pass anything into law based on the current proposal. They should send the EC back to the drawing board, and maybe there would never be a second proposal. But it could be that some people just want to have some outcome so they will (rightly or not) claim victory as they seek a nomination for reelection or audition for higher office or whatever.

It would be a waste of time, money (particularly taxpayers' money), and energy. Sadly, the EU's economic policy initiatives don't work very often, yet there are always politicians who put their weight behind them and hope for political gain from them. Maybe that's the inevitable fate of this proposal, but I'm not ready to give up yet. Rationality could still prevail, and Professor Hübner's draft opinion is, by and large, a silver lining.

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Merkel's party in hurricane-strength shitstorm after falsely alleging U.S. corporations pay anti-Article 13 demonstrators

The day after tomorrow, Tuesday, March 26, the European Parliament will hold its first-reading plenary vote on the Directive on Copyright in the Digital Single Market aka EU Copyright Directive, at 12:30 PM local time in Strasbourg. The proponents of the totally ill-conceived Article 13 (which is technically Article 17 now due to a renumbering, but everyone knows what is meant by Article 13) would like it to be the final reading, but don't hold your breath:

1. Under normal circumstances and according to conventional wisdom, you'd get your way. But this is an atypical situation with outside pressures and dynamics. There have been various defections in recent weeks from the pro-upload-filter camp, the most important one being Friday's announcement by Poland's Platforma Obywatelska (Civic Platform), the second-largest (by nmber of MEPs) party in the European People's Party group and even in the EU Parliament as a whole, to vote against Article 13 and, if necessary, against the entire bill. I thanked Platforma Obywatelska in my speech at yesterday's Munich demonstration (the largest one of roughly 100), which starts at 2h42m of the recorded livestream.

2. Even if an unholy alliance between Merkel's party and numerous Southern European parties secured a majority on Tuesday, the proposed directive would still have to be formally adopted by the EU Council. Normally, such approvals following an earlier vote at the level of the diplomats are listed as an "A item," meaning for approval without discussion (they're approved by no one objecting). That's the way things work in the EU. But in this case, considering that even based on traditionally-conservative police estimates we had well over 100,000 people (mostly but not all of them rather young) on the streets across Germany (40,000 in Munich alone), I believe we have the potential to create a situation in which no member of the German government short of Merkel herself--she did a horse trade with Macron, who insisted on Article 13--would want to be responsible for the formal adoption of the bill by failing to raise a hand. And if Merkel herself wanted to take that step, it might even be the end of her government coalition.

   We're not there yet. The immediate objective is to get Article 13 voted down. But even if not, we won't give up. It would then be conceivable that the recently-elected chairwoman of Merkel's party, Annegret Kramp-Karrenbauer, could replace Merkel in a so-called Jamaica coalition (based on the colors of the parties involved) and kill Article 13. That's because the Social Democratic Party of Germany (SPD) opposes Article 13 and appears to be preparing for an exit from Merkel's coalition government. The number of people taking to the streets would reach stratospheric heights if we mobilized not only opponents of Article 13 but also disillusioned SPD voters who want Merkel's "grand coalition" to come to an end sooner rather than later (such as the SPD's youth organization) and other people who are tired of Merkel, of whom there's plenty.

   Should the EP adopt Article 13, I'll be among those who will immediately try to dissuade the German government from supporting its formal adoption regardless of unwritten diplomatic procedural rules.

We're less than 48 hours away from the EP vote, and Merkel's party (formally two parties--CDU and CSU--but practically just one as the CSU is basically the pseudo-independent Bavarian state party like Minnesota's DFL is just the Democrat Party in the North Star State) is going through a shitstorm now that beats everything they've ever been through. It's a hurrican.

What triggered this shitstorm is the most stupid and most outrageous claim made in the whole copyright reform debate, which means a lot because earlier this week the CDU/CSU delegation to the European Parliament already made itself the laughing stock of German Internet users by saying something totally foolish and incompetent about Google's inner workings. Also, the European Commission's "mob" blog post won't be forgotten anytime soon.

The CDU/CSU delegation's incompetence is an embarrassment, but now they're seriously antagonizing an entire generation of voters by falsely alleging that people taking to the streets against Article 13 are paid by "large American corporations" (click on the image to enlarge; this post continues below the screenshot of the tweet):

In the above tweet, the CDU/CSU EP delegation's official Twitter account shared a quote from an interview their leader in the EP, Daniel Caspary MEP, gave to the "Bild" tabloid newspaper, which I'll translate as follows:

"When American corporations attempt to prevent the adoption of a law by massively leveraging disinformation and paid demonstrators, our democracy is in jeopardy." (emphases added)

This. Is. Outrageous.

This. Is. Preposterous.

This. Is. Pathological.

What Mr. Caspary apparently confused for hired guns at demonstrations is that one NGO, EDRI (which is far left of my political inclinations to be sure) offset parts of some activists's travel costs, to the tune of 450 euros (many professional lobbyists charge more per hour) for coming to Brussels and Strasbourg to meet MEPs. But with roughly 150,000 demonstrators on German streets yesterday, plus dozens of demonstrations in other European cities (roughly 100 venues in total), it would have cost tens of millions to pay 450 euros to each participant in yesterday's demonstrations.

Various CDU politicians, also including some members of the German Bundestag (Federal Parliament), have distanced themselves from this idiocy in the strongest terms. The CDU youth organization's Hamburg-Harburg chapter even warned that this offensive behavior against people exercising their democratic rights would make their party lose an entire generation of voters.

Actually, the crowds across Germany even included some CDU members as this tweet shows (#cnetz is the CDU/CSU-aligned digital-economy think tank).

It's high time the CDU/CSU realized that this is a grassroots movement. I wasn't paid for my participation in the Munich demonstration and didn't have the slightest indication of anyone receiving anything. Instead, the organizers are even struggling to offset their hard costs with donations, as Arnold Schiller, the organizer of the Munich demonstration (which unexpectedly even surpassed the attendance in Berlin, which was originally expected to be the main event) explained on Twitter.

A leading German YouTuber, Rezo (@rezomusik on Twitter), replied to a retweet of mine of CDU politician distancing himself from his party's EP delegation's "communications" on Twitter that the issue is one of substance, not style: the problem is not how they say it, but what they say and, above all, the underlying disdain of democracy.

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Official concession of upload filters by German government destroys credibility of proponents of Article 13 of EU Copyright Directive

The European Parliament will hold its plenary debate on the Directive on Copyright in the Digital Single Market on March 26, suggesting a plenary vote later that day or the next day. Further headway has meanwhile been made against Article 13, though probably still not enough. For an example, it's now likely that the number of mostly (but not exclusively) young people taking to the streets on March 23 will be in the six figures. The Berlin demonstration alone (which will be the main one) is now expected to have at least 20,000 participants, with more optimistic projections being in the range from 40,000 to 50,000. By the way I'm too busy to go to Berlin, but I will participate in the Munich demonstration that same day. Recently, additional MEPs have declared their intent to vote against Article 13, including the small-in-numbers but well-respected and influential Luxembourgish delegation to the center-right European People's Party (EPP) group in the EU Parliament.

Proponents of Article 13 might still succeed, but they'd pay dearly for it in the EU elections in May--and way beyond those elections. We're talking about generations of voters who have a pretty good idea of what's going on and are not going to take it lightly. There's quite some awareness now among teens, twens, and people in their thirties and fourties for the issue--and there'll be a lot more awareness among those age groups soon. No political grouping would bring up more voters against itself than the EPP, and it's the only political group that is still largely (apart from some pockets of resistance) in favor of that crazy Article 13.

What might happen is that the EPP will later remember its support of Article 13 as the biggest mistake in the history of that Europe-wide group of conservative (partly in name only) parties that for some time has been the most powerful political group in the EU.

If the EPP's national campaign managers in countries with a strong, vocal and growing anti-Article 13 movement aren't either totally incompetent or sleepwalking through this year's elections, they will already have realized that this is the number one problem they face, even eclipsing the issue of migration because of the power of the Internet.

The German government has just provided a silver bullet that may still persuade a majority of MEPs to vote against Article 13:

The big issue here is whether or not website operators and app makers would have to install upload filters in order to minimize their risk of being exposed to strict copyright liablity under Article 13 for failure to take measures necessary to prevent infringement. So far, Axel Voss MEP (EPP/Germany) and his brothers-in-arms have insisted that upload filters aren't mentioned explicitly in the proposed text. It's a particularly sensitive issue in Germany because the coalition agreement between Merkel's CDU (an EPP member party), its Bavarian sister party CSU (also an EPP member party) and the SPD (S&D group in the EP) explicitly speaks out against upload filters, yet the Merkel regime voted in its favor at the EU level (in the EU Council), over a rather half-hearted objection (more of a PR stunt) by the SPD.

Merkel's spokesman Steffen Seibert even tweeted a banner that said the bill doesn't require upload filters.

But what's happened now exposes Merkel and her minions as having misled MEPs and the general public all along. An official question submitted by a member of the German Bundestag (national parliament), the libertarian FDP's Konstantin Kuhle, provoked the following answer by state secretary (in the Federal Ministry of Justice) Christian Lange (SPD):

"In the federal government's view it appears likely that algorithmic measures will have to be taken in connection with large volumes of data for practical reasons alone."

"Algorithmic measures" obviously means "upload filters." There's no denying anymore. They aren't even trying.

The Federal Ministry of Justice is run by the social democrats, and when that ministry answers a question related to one of its areas of responsibility (intellectual property policy has always been handled by the Federal Ministry of Justice, with the Federal Ministry of Economic Affairs merely being able to provide input of limited influence), it's allowed to do so on the federal government's behalf--even if other parts of the government disagree.

The most likely reason would be that the social democrats decided to drop this bomb on Article 13 in retaliation for Merkel's breach of the coalition agreement. It's less likely that Merkel's party has meanwhile concluded that it stands to lose from Article 13, which Germany wouldn't have supported if not for a horse trade between Merkel and Muckron (yeah, that spelling is intended). In that case, they might be secretly supportive of the statement by the Federal Ministry of Justice and also hope that things would now fall apart in the EU with respect to Article 13. But I guess this was done by the SPD and won't be viewed favorably by Merkel's party.

Even Frankfurter Allgemeine Zeitung (FAZ), an economically conservative (though socially rather leftist) newspaper that used to spread the no-upload-filter propaganda now considers it ridiculous to deny that Article 13 involves upload filters. FAZ even violated ethical standards by publishing a pro-Article-13 op-ed by a "creative industry" (meaning music or whatever) lobbyist without properly disclosing his conflict of interests. And FAZ's EU reporter Hendrik Kafsack has traditionally been either unwilling or unable to figure out the legal and practical truth about intellectual property legislation: in the software patent context, he was adamant about the Commission's and the EPP's lie that it wasn't about patents on software, only patents on software-controlled devices like washing machines, though SAP placed a big advertisement in an EU publication in which SAP, which obviously never made washing machines or similar products, stated the directive would cover its "innovations." I only had one conversation with him a long time ago and can't tell for sure, but he may just lack the knowledge and skills to figure these things out himself, and when I read what he writes about the copyright bill, I also find fundamental misconceptions there.

The article I just linked to--which says that it's ridiculous to deny the upload-filter issue--was authored by a Berlin-based FAZ editor who apparently has a much better grasp of the issues. By the way, FAZ also made a major IP-related mistake in December when they wrote about Apple losing a lot of business in the final days of the last Christmas Selling Season because of that Munich patent injunction secured by Qualcomm on a fake basis. If the person who wrote that piece had even had a minimum of knowledge about how injunctions (not just patent-related ones) are enforced in Germany, he'd have known that enforcement prior to resolution of the appeal requires a bond or deposit, which always (and in this case it was about $1.5 billion) takes more than a day to make so the injunction can actually be served on the defendant in the form of a letter demanding immediate compliance.

At least they have now, at long last, recognized their mistake regarding Article 13. With software patents they never retracted anything, not even after we had defeated the liars. That's progress.

Many German EPP MEPs do pay attention to what FAZ writes. In the best case, some of them would ask Mr. Voss some tough internal questions now about what he's been saying for many months.

Unlike many Article 13 opponents who bash or even insult Mr. Voss, I actually have a lot of sympathy for him. Because of my pro-copyright positions in connection with Oracle v. Google, I've also suffered a couple of shitstorms, which wouldn't have happened if the lower court (Northern District of California) hadn't made some bad decisions that the higher court (Federal Circuit), which arrived at the very same conclusions regarding copyrightability (first appeal) and fair use (second appeal) as I did, found erroneous. In fact, before Mr. Voss became the lightning rod for Article 13 opponents, I was the #1 shitstorm victim among people voicing pro-copyright positions. But even I oppose Article 13. And if enough people take to the streets on March 23, as I will, maybe a miracle will still happen. I've seen those miracles in similar situations.

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