Making IP infringement a crime

"[UK] courts are quite sensible about these sort of things — they are not going to imprison someone for a marginal thing," said Stevens. "Trading standards [the UK government agency that tackles trademark infringement] are not going to go after someone where the case is marginal. They will go after people who in course of business cynically possess something that is clearly an infringement — someone who is a professional infringer or counterfeiter."

Impact on open source developers
There are two main implications of this directive to free and open source software. Firstly, if a free software developer is found to have infringed intellectual property in the code he has written, he could be subject to criminal charges and may not be granted legal aid to defend himself. Developers of proprietary software in commercial settings would be less affected, as the company they work for would generally be held accountable rather than the individual developer.

"The free software community should be aware of it [the proposed directive] and follow it closely. It is something that they could find themselves at the end of if they're not careful, although the full force of it will be aimed at sophisticated counterfeiting businesses," says Penfold from DLA Piper.

Georg Greve, the president of the European branch of the Free Software Foundation (FSF), says his organisation is worried about the directive, as those who move along "the borders of what is allowed and what is not", which includes some free software developers, now risk criminal punishment.

"Today, these people have to work under threat of financial punishment, in some cases possibly wiping out their financial livelihood. If this new directive comes to pass, they additionally risk going to jail," he says

The second implication of this directive is that if a software product is found to infringe IP, businesses and individuals using the software could be subject to criminal charges. This could dissuade companies from using open source software, due to concerns about the risk of IP infringement, according to Penfold from DLA Piper.

Although those using proprietary software face a similar risk, there has been some scaremongering about the risk of intellectual property infringements in open source code. For example, the City of Munich temporarily delayed its Linux migration due to concerns about patent problems in the open source operating system. Microsoft has also made claims about the risk of IP infringement in Linux, for example, the company's CEO Steve Ballmer said at a conference in Singapore that Linux violates more than 228 patents and that someday "somebody will come and look for money owing to the rights for that intellectual property".

Stevens from Olswang claims it is unlikely that the users of software would be affected by the directive — the organisation that developed the software is a more obvious target, and any company that pursues criminal cases against users is likely to suffer from the bad publicity.

"It's not that often that companies who have IP rights pursue cases against users," he says. "Most IP owners want you to continue buying their product and to continue dealing with them. If they started threatening someone with prison or a criminal record, how do you think their customers will feel?"

But, there is one well-known case where users were prosecuted for using code — the SCO Group's case against car maker Daimler-Chrysler and auto-parts retailer AutoZone over their use of Linux. SCO claimed that AutoZone infringed on SCO Unix copyrights through its use of Linux and that DaimlerChrysler had breached its contract with SCO.

Although the cases have not helped SCO's reputation as a software vendor, the cases are likely to have helped the company sell IP licenses to Linux users, which is one of its business strategies. The company has also received considerable sums of money from Microsoft, which has lead some in the industry to claim that Microsoft is driving SCO's legal battle against Linux.

Ross Anderson, the chair of the Foundation for Information Policy Research (FIPR), says that the proposed directive could help SCO and other companies in future IP infringement cases against open source software.

"In future somebody like SCO will have another course of action open to them — the threat of criminal charges. This threat would enable SCO to cast a larger legal cloud. Once you make something a crime, respectable, middle-aged executives are less happy to do it," says Anderson.

Penfold from DLA Piper agrees that the proposed directive could "quite possibly" allow the imprisonment of the boss of a company that is using infringing software, although it will depend on whether the defendant can argue that it was unintentionally infringing. "How will the directive differentiate organised crime from a business that is unknowingly infringing? — We'll have to see," he says.