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The European Commission has presented a draft directive that punishes copyright infringement for commercial purposes, but leaves the home music downloader untouched, infuriating the entertainment industry.

The proposed directive is meant to harmonize intellectual property rights enforcement laws in the 15-nation European Union (EU). It aims to strike "a fair balance" between interests of right holders and the opportunities the Internet offers to consumers, according to Commission documents.

Criminal sanctions apply only when copyright infringement is carried out intentionally and for commercial purposes, the Commission said.

A consortium of industry groups, including representatives of the tech industry as well as music companies, declared the proposal "inadequate."

They still have time to lobby for tougher sanctions. The Commission's draft directive has to pass the European Parliament and the European Union's Council of Ministers before it is officially adopted.

Directive Highlights

Peer-to-peer file-sharing services that encourage copyright infringement and make money from advertising are commercial, according to the Commission. "That is illegal and should be stopped," the Commission said. Examples of such file-sharing services are Kazaa and Morpheus.

Even though the individual is let off the hook, the Commission uses strong words to condemn piracy and counterfeiting, which is also part of the draft directive. The Commission estimates over 17,000 jobs are lost annually through piracy and counterfeiting in the EU.

"There is also evidence that counterfeiting and piracy are becoming more and more linked to organized crime and terrorist activities because of the high profits and, so far, the relatively low risks of discovery and punishment," the Commission said in a statement.

"Pirates and counterfeiters are in effect stealing from right[s] holders," said Frits Bolkestein, internal market commissioner, in a prepared statement. "If we don't stamp that out, the incentives for industrial innovation and cultural creativity will be weakened."

Assessment Criticized

The music industry blasted the proposal, calling it "inadequate" and "unambitious." The criticism came in a statement issued jointly by ten organizations, including the Business Software Alliance, a technology trade group. Also voicing disapproval were the International Federation of the Phonographic Industry and the Motion Picture Association.

"The proposal creates a two-tier system of enforcement where some types of piracy are acceptable and others not," the industry organizations said.

Furthermore, the Commission underestimates the size of the piracy problem and falls short of providing the legal framework to fight it, the group said. Collectively, the film, video, music, and leisure software industries in Europe claim they lose over $4.9 billion annually as a result of piracy.

The music industry also charges that the Commission fails to achieve its goal of harmonizing national laws on intellectual property rights enforcement in the European Union, instead perpetuating a patchwork of different legal measures and procedures across the EU.

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